Predatory Lending and Redlining

Step Type: Text

What learners will learn: Overview of predatory lending and redlining.

Step Description:
Financial institutions must be aware of practices that strictly contravene fair lending compliance. This resource expands on both predatory lending and redlining. Though similar, predatory lending typically means imposing unfair, deceptive, or abusive loan terms on borrowers, while redlining is a discriminatory practice that puts services completely out of reach for residents of certain areas based on race or ethnicity.

Summary of Content:
This step defines predatory lending and redlining. It explains how predatory lenders use deceptive tactics and exploit vulnerable borrowers. It also describes redlining as the denial of financial services based on race or location, highlights its historical roots, and presents examples from various financial services and industries.

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Step Type: True or False

What learners will learn: How to define predatory lending.

Step Description:
Predatory lending relies on borrowers' lack of knowledge, or lack of access to other lending opportunities. This type of lending involves unfair or unfavorable terms that only benefit the lender.

Summary of Content:
This step defines predatory lending and identifies its key characteristics, including high fees, deceptive terms, and aggressive sales tactics. Learners will recognize that these loans are often designed to be unrepayable and exploit vulnerable consumers. The step emphasizes that predatory lending prioritizes lender profit at the borrower's expense.

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Step Type: MultiChoice

What learners will learn: Predatory lending practices.

Step Description:
Predatory lenders often target communities where few other credit options exist, which makes it more difficult for borrowers to shop around.

Summary of Content:
This step explores the deceptive methods used by predatory lenders to exploit underserved or vulnerable populations. Learners will identify typical sales tactics, recognize high-risk borrower profiles, and learn how these practices can result in long-term harm. The step also highlights the role of financial institutions in preventing such abuse.

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Step Type: True or False

What learners will learn: How to define redlining.

Step Description:
Redlining is the systematic denial of mortgages, insurance, loans, and other financial services based on a location and its demographics rather than on an individual’s qualifications and creditworthiness. Though outlawed in the 1960s, forms of redlining persist even today.

Summary of Content:
This step defines redlining and explains how it continues to limit access to financial services for certain communities. Learners will understand that redlining is illegal and recognize its discriminatory roots in race and geography. The step highlights the far-reaching impact of redlining on wealth-building and access to essential services.

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Step Type: MultiChoice

What learners will learn: Redlining practices and impact.

Step Description:
Redlining reduces the availability of loans and other community investments in specific areas based on racial demographics alone. The term derives from literal red lines drawn around these neighborhoods to denote areas that lenders would not invest in.

Summary of Content:
This step explains the historical origin of the term "redlining" and details the lasting impact it has on marginalized communities. Learners will explore how redlining affects access to mortgages, business loans, and insurance, and how it perpetuates racial wealth gaps. The step also introduces the concept of corporate redlining and how it manifests today.

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Step Type: Crossword

What learners will learn: Predatory Lending and Redlining course review.

Step Description:
Test your knowledge of predatory lending and redlining in this mastery step!

Summary of Content:
This final step reinforces the key concepts covered in the course, including definitions, historical context, community impact, and compliance implications. Learners will recall important terms and test their understanding through an interactive crossword challenge.

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